Sony try NOT to explain the digital deal

August 2014

CONTRACTRecord labels, artistes

The legal battle between 19 Entertainment and Sony Music in the US could result in some judicial consideration of the ongoing digital royalty debates in the music industry – although Sony seemingly would rather avoid this, after it emerged that the major had filed a motion to have the case dismissed last month. 19 Entertainment is suing Sony on behalf of various ‘American Idol‘ winners who scored Sony Music record deals via the show, says it found “systemically incorrect calculations” on two separate audits of royalty payments made by the major, adding that the record company then failed to allow 19’s auditors to access all the data they required to do a full audit. The 19 litigation also includes disputes over the way digital royalties are calculated – and the question of whether labels should be paying lower record sale royalties or higher licensing revenue splits on download and streaming income.

The Hollywood Reporter also notes that 19 Entertainment is also asking if the major labels are obliged to share with their acts damages received from successful file-sharing litigation. In its motion to dismiss Sony argue that it isn’t obliged to share with artists the multi-million damages stemming from general file-sharing lawsuits – such as the long-running LimeWire legal battle that resulted in a $105 million pay off for the majors – unless recordings from said artist are specifically included in a lawsuit. It seems lawyers for 19 have already responded to that, arguing that, by their interpretation of the recording contracts signed by Idol winners, the artist is due some kickback from successful catalogue-wide anti-piracy litigation. “Sony has multiple ways to bring suit” they argue. “The manner in which Sony brings suit is of no consequence as to 19’s right to receive a portion of any money which is attributable to artist’s masters”.

Any decision could clarify a number of royalty issues raised across by artist community against the major labels, in the US at least.